Report: Part B funds stable, hospital trust running out

Medicare’s Part B trust fund is well funded and stable enough to pay physicians through the foreseeable future, according to an annual report by the Medicare Board of Trustees.

Seema Verma

The Supplemental Medical Insurance (SMI) trust fund, which covers Medicare Part B and D, contained $104 billion in assets at the end of 2018 and is expected to be adequately financed in all years because of continued premium and general revenue income, according to the report, which was released April 22.

However, the Hospital Insurance (HI) trust fund, which funds Medicare Part A, is expected to run out by 2026, the same projection as last year, the trustees reported.

In addition, trustees said that total Medicare costs – including both HI and SMI expenditures – will grow from about 4% of gross domestic product (GDP) in 2018 to about 6% of GDP by 2038 and then increase gradually thereafter to about 6.5% of GDP by 2093.

The faster rate of growth in Medicare spending, compared with GDP growth, is attributable to a growing number of Medicare patients and increased volume and intensity of health care services, according to the report. Alone, SMI costs are projected to grow steadily from 2% of GDP in 2018 to about 4% of GDP in 2038 because of the aging population and rising health care costs.

The report delivers a dose of reality, reminding the country that the program’s main trust for hospital services can pay full benefits for only 7 more years, Seema Verma, administrator of the Centers for Medicare & Medicaid Services said.

“The Trump administration is working hard to protect and strengthen Medicare and lower costs while improving quality in order to protect the program for future generations of seniors who have paid into the program their whole lives,” Ms. Verma said in a statement. “If we do not take the fiscal crisis in Medicare seriously, we will jeopardize access to health care for millions of seniors.”

Department of Health & Human Services Secretary Alex M. Azar II said the annual report provides a sobering reminder that more work is necessary to support current and future generations of seniors.

“Instead of trying to expand Medicare into a universal entitlement that even covers wealthy Americans of working age, as some have proposed, we need to fulfill Medicare’s promise to our seniors,” Mr. Azar said in a statement, referring to proposals to expand government health care by some Democrats.

The trustees report notes that Medicare has introduced a number of initiatives to strengthen and protect the program and finalized a number of rules that advance a patient-driven health care system through competition.

“In particular, CMS is strengthening Medicare through increasing choice in Medicare Advantage and adding supplemental benefits to the program, offering more care options for people with diabetes, providing new telehealth services, and lowering prescription drug costs for seniors,” the agency stated in a press release. “CMS is also continuing work to advance policies to increase price transparency and help beneficiaries compare costs across different providers.”